Miscellaneous amendments to tax credit legislation in consequence of changes introduced in response to the COVID-19 pandemic

New statutory instrument includes provisions relating to easement of working hours rules and the disregarding of certain coronavirus-related payments in the calculation of tax credits

New regulations have been issued that make miscellaneous amendments to tax credit legislation in consequence of changes introduced in response to the coronavirus (COVID-19) pandemic.

In force from 14 January 2021, the Tax Credits, Childcare Payments and Childcare (Extended Entitlement) (Coronavirus and Miscellaneous Amendments) Regulations 2020 (SI.No.1515/2020) -

• provide for certain payments to be disregarded as income in the calculation of tax credits - including NHS Test and Trace Support Payments for England, payments from the Scottish COVID Winter Grant scheme and similar devolved administration schemes;
• ensure that working tax credit claimants continue to satisfy entitlement conditions relating to hours normally worked during periods of self-isolation or lockdown;
• ensure that furloughed and coronavirus-impacted workers have access to working tax credit during periods of absence from work due to childbirth, parental bereavement and adoption; and periods of time off work in connection with illness, incapacity or limited capability; and
• refine the definition of a coronavirus-impacted worker to provide for when a person is no longer treated as such - to ensure that they have the same treatment, already in regulations for a furloughed worker, when the CJRS ends or they have a permanent change to their working hours.

The explanatory memorandum to the regulations also clarifies the operation of the working hours easement introduced by HM Revenue and Customs that treats working tax credit claimants who are not working their normal hours due to the effects of the pandemic as being in qualifying remunerative work for the period of the CJRS and a further eight weeks -

‘This instrument puts beyond doubt when furloughed and coronavirus-impacted workers should have an additional eight weeks to re-establish their normal working hours once the CJRS ends.

 Where a claimant remains a furloughed worker or a coronavirus-impacted worker until the cessation of the CJRS, claimants will have a period of time (eight weeks after the cessation of the CJRS) to return to working sufficient hours to satisfy the eligibility criteria. Furloughed and coronavirus-impacted workers who have a permanent change before the CJRS ends do not have access to the additional eight weeks.’

NB - the regulations also -

• ensure that parents whose income has been impacted by coronavirus and who are receiving payments from a coronavirus job support scheme remain eligible for both tax-free childcare and to 30 hours free childcare for three to four-year-old children of working parents; and
• provide for Best Start Foods and Mesh Complication payments introduced by the Scottish Government to be disregarded as income in the calculation of tax credits.

SI.No.1515/2020 is available from legislation.gov.uk